Reality Check

Starting Your Site

Perception:Venture capitalists are throwing money at Net start-ups.

Reality: Maybe one business plan in 200 gets venture funding, according to Guy Kawasaki, CEO of, a Palo Alto, California, company that helps steer start-ups through the VC process. It's a good bet that only one in every 400 companies that seek VC funding gets any. The smarter way to launch a business is the old-fashioned route-with your own money and cash from family and friends.

Perception:If you build it, they will come.

Reality: "I think many in e-commerce still believe that," says Stan Anapol, 28, the founder of Arlington, Virginia-based, a site that sells political paraphernalia. "You must do much more than go online before anyone will ever see your site. Good promotion and advertising are key to an e-commerce Web site's survival. Finding the right concept is only the beginning of a long road to attracting customers."

Perception:E-commerce is the "people-less" route to building a business-staffs are very lean.

Reality: "For all the talk of the power of technology to transform the marketplace, it's still about people," says Joe Pezzillo, 31, founder of, a Boulder, Colorado, Internet radio network. Worse: Qualified workers are in desperately short supply in most of the country, and the dotcom executives who survive are the ones who are persistent and ingenious in their recruitment efforts.

Perception:Stock options will make everyone involved in a Net start-up rich.

Reality: "Just multiply by zero the number of options you have, and that should give you a reasonable idea of their worth," says Bruce Weinberg, an associate professor of marketing at Bentley College in Waltham, Massachusetts. And the big financial reality is that most stock issued by most start-ups is worthless. Getting rich on the Net happens, but it takes hard work and luck.

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This article was originally published in the September 2000 print edition of Entrepreneur with the headline: Reality Check.

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